Correlation Between Protalix Biotherapeutics and Transcode Therapeutics

Can any of the company-specific risk be diversified away by investing in both Protalix Biotherapeutics and Transcode Therapeutics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Protalix Biotherapeutics and Transcode Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Protalix Biotherapeutics and Transcode Therapeutics, you can compare the effects of market volatilities on Protalix Biotherapeutics and Transcode Therapeutics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Protalix Biotherapeutics with a short position of Transcode Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Protalix Biotherapeutics and Transcode Therapeutics.

Diversification Opportunities for Protalix Biotherapeutics and Transcode Therapeutics

-0.56

Correlation Coefficient

Protalix Biotherapeutics  Transcode Therapeutics

Excellent diversification

The 3 months correlation between Protalix and Transcode is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Protalix Biotherapeutics and Transcode Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcode Therapeutics and Protalix Biotherapeutics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Protalix Biotherapeutics are associated (or correlated) with Transcode Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcode Therapeutics has no effect on the direction of Protalix Biotherapeutics i.e., Protalix Biotherapeutics and Transcode Therapeutics go up and down completely randomly.

Pair Corralation between Protalix Biotherapeutics and Transcode Therapeutics

Considering the 90-day investment horizon Protalix Biotherapeutics is expected to generate 0.34 times more return on investment than Transcode Therapeutics. However, Protalix Biotherapeutics is 2.91 times less risky than Transcode Therapeutics. It trades about 0.22 of its potential returns per unit of risk. Transcode Therapeutics is currently generating about 0.06 per unit of risk. If you would invest  106.00  in Protalix Biotherapeutics on September 12, 2024 and sell it today you would earn a total of  77.00  from holding Protalix Biotherapeutics or generate 72.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Protalix Biotherapeutics  vs.  Transcode Therapeutics

Protalix Biotherapeutics

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Protalix Biotherapeutics are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Protalix Biotherapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Transcode Therapeutics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Transcode Therapeutics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Transcode Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Protalix Biotherapeutics and Transcode Therapeutics

The main advantage of trading using opposite Protalix Biotherapeutics and Transcode Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Protalix Biotherapeutics position performs unexpectedly, Transcode Therapeutics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Transcode Therapeutics will offset losses from the drop in Transcode Therapeutics' long position.

The idea behind Protalix Biotherapeutics and Transcode Therapeutics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.